Cell-phone lemon law sought by legislator

SPRINGFIELD — The first time her new Motorola Q phone went on the fritz, she thought it was a fluke. When her phone had to be replaced a second time, she got frustrated.

When it malfunctioned a third time, Rep. Susana Mendoza was fed up.

"I thought something had to be done about this. Then I thought: Wait, I can do something about this," said Mendoza, a Chicago Democrat who is sponsoring legislation to create a cell-phone lemon law.

The proposal would allow the state's 8.5 million wireless customers to cancel their contracts without paying early termination fees if a phone must be replaced or repaired at least three times within a contract period.

Consumers would also have the option to upgrade or downgrade phones without extending their service agreements, and companies would have to provide customers with a written statement informing them of their rights. Damage caused by consumers would not be covered.

Mendoza's bill is pending before the full House.

No other state has such a law on the books, according to the National Conference of State Legislatures, though Tennessee is considering a similar lemon law. Other states have proposed legislation targeting poor service and dropped calls.

Consumer advocates say the measure would hold wireless companies more accountable and discourage manufacturers from rushing to put out new products that might be faulty.

"The more flexibility and choices, the better for consumers, and competition," said Brian Imus, director of the Illinois Public Interest Research Group.

Industry representatives say the move would unfairly hold wireless providers responsible for manufacturing issues, make Illinois more difficult for companies to operate in, infringe on federal regulations and give customers the ability to break contracts without warrant.

"This provides a road map for customers to get out of their contracts if all they do is complain aggressively enough," said Mike McDermott, executive director of state public policy for Verizon. "Why not let cable subscribers cancel their contracts if they have bad reception three times in a row? It's a treacherous path."

Because wireless companies heavily discount phones for service subscribers, allowing customers an "easy way out" of their contracts would cause costs to go up and "put Illinois at the bottom of the heap for new products and services," McDermott said.

"There are too many unintended consequences," said Rep. Sandra Pihos (R-Glen Ellyn), who voted against the bill last month in the Consumer Protection Committee. "If you can cancel a contract based on this, I don't know how they will provide stable prices for their customers at the end of the day."

Motorola spokesman Chuck Kaiser said there have been no major problems with the Q phone and that the device, like many others, comes with a one-year warranty separate from the service agreement. Wireless providers already offer replacement programs for defective merchandise, and there is no need for lawmakers to come between a warranty agreement between consumers and manufacturers, he said.

"Customers already have adequate remedies," Kaiser wrote in an e-mail.

Others worry that the measure would leave room for states to create a patchwork of regulations that would infringe on an industry regulated by the federal government.

"Wireless is a national industry, set up to be purposely responsive to market pressures and consumer demands," said Joe Farren, spokesman for CTIA-The Wireless Association, an international organization dedicated to expanding wireless service. "This puts at risk the national framework that has been so beneficial to consumers. Illinois would be an island in a national economy."

But Mendoza said wireless companies shouldn't worry. As long as they keep customers happy and provide a quality product, little about how they operate would change.

"When they serve a contract for two years, they should be able to keep their side of the bargain," Mendoza said.

"That means providing a working phone and not having to spend time and money replacing it," she said. "If their service is so great, then they won't lose customers. This is not the end of the wireless industry as we know it."